Poor money saving linked to general impulsiveness

Financial imprudence is linked to other impulsive
behaviour such as overeating, smoking and infidelity, according to a new study led
by UCL researchers, published in the journal Personality and Individual Differences. The study, conducted through the BBC website with over
40,000 participants, measured people’s financial impulsivity by asking whether
they would they prefer to receive £45 in three days or £70 in three months. The
survey asked a related series of questions about other behaviours. Nearly half
of those who responded preferred the smaller-sooner sum of money, and these
people were more likely to show a raft of other impulsive behaviours.

Dr Stian Reimers, ESRC Centre for Economic Learning and
Social Evolution at UCL, says: “One
of the big questions about people’s financial planning is whether decisions to
spend or save come from personal knowledge and experience of money matters or whether
they reflect someone’s personality more generally.

“Our research shows
that people with an impulsive money-today attitude ignore the future in other
ways. For example, they are more likely to smoke and more likely to be
overweight, which may reflect a preference for immediate pleasure of nicotine
and food over long-term good health. People who chose to take the
smaller-sooner amount of money were also more likely to admit to having had an
affair in recent years, suggesting another manifestation of desire for
immediate gratification.”

The study controlled for age, education and income, and
found that those most likely to make impulsive financial choices were young,
poorly educated, and on lower incomes.

Dr Reimers continues: “Given that those who decline £70 in three months in favour of £45
in three days are essentially turning down an interest rate that's hundreds of
times what they'd get on the high street, this may begin to explain why some
people are reluctant or unable to save money.

“Learning to make
decisions that lead to long-term happiness, not just instantaneous
gratification, could benefit us all.Simple
techniques can help reduce impulsivity: like imagining how you’d feel about
your decision in a year’s time, or trying to avoid making decisions in the heat
of the moment.”